Coworking: the pivot in today’s transformation of work?

There are a a set of work-related trends that seem to sketch a scenario that could mean the end of of the office.

A recent Gallup study found that 71 percent of US workers are “not engaged” or are “actively disengaged” in their work. This suggests that only a third of American workers are deeply engaged in their jobs, which is at least a serious challenge for businesses, and perhaps a serious threat. And the proportion of disengaged seems to be rising.

New scientific evidence is emerging about the benefits of telework (or telecommuting), supporting anecdotal knowledge about workers’ desire to work outside of the office. (We’ll be digging more into these kinds of topics at Net:Work on Dec. 8.) Stanford University partnered with a Chinese travel agency to find out if teleworkers were more productive, as reported by Ray Fisman at Slate:

Within a few weeks, the performance of the telecommuting group started to pull away from their cubicle-bound counterparts. Over the duration of the experiment, home workers answered 15 percent more calls, partly because each hour was 4 percent more productive, and partly because home office employees spent 11 percent more time answering phone calls. (Home workers took fewer breaks and sick days, rarely arrived late to their desks, and had fewer distractions.) While answering more calls, the distractions of home life had no impact on the quality of service: The home-work group converted phone calls into sales at exactly the same rate as those in the office. And employees themselves liked the arrangement better, making it look like a win-win for the company. The home-work group reported less “work exhaustion,” a more positive attitude towards their jobs, and were nearly 50 percent less likely to say they were planning to quit at the end of the eight months. (In fact the quit rate among home-office workers during the experiment was about one-half of what it was for those making the commute.)

And the same sort of business thinking that is interested in productivity of telework also starts to extrapolate about the impacts. If 40 percent of workers — in general — are working out of the office, that means 40 percent of office space — and associated expenses, like furniture, energy, and cleaning — might be productively invested elsewhere. In a 2007 Businessweek report, it was estimated that as much as 60 percent of offices space is “a dead zone of darkened doorways and wasting cubes,” and some have estimated that $600B is wasted in direct costs, leaving aside the externalities like impact to the environment, and the costs that employees incur commuting.

Sara Horowitz recently made the case that we really don’t know the makeup of the US workforce any longer, since the US government stopped counting independent workers in any systematic way. However, her research at the Freelancers Union — she’s the founder — indicate that as much as one third of our workforce participates in the rapidly growing freelance economy.

Connecting The Dots

These seemingly independent trends are tied together by the changing mindset of the people doing the work. Young people in particular are increasingly disinclined to commute to a distant office for the sake of ‘face time’, but many people of all ages have personal reasons for wanting to work in a ‘results-only work environment’, where getting the job done becomes the core principle surrounding work.

Giving workers more control of their lives — giving them back many hours of time per week not spent in commuting and pointless meetings, letting them decide when to do what, and putting money in their pockets by cutting commuting costs — has a very serious impact on morale. As the Chinese travel agency example shows, many of the workers reported less ‘work exhaustion’ and were less likely to quit. That seems like a direct antidote to the unengagement risks that Gallup reports US companies are running.

And people moving into telework and results-only work models will need new tools — like the stream-based work media tools I discussed in a recent post here on GigaOM. But with ubiquitous connectivity, mobile devices, and the proliferation of work media, the technological infrastructure to support telework is very low-cost, and requires basically zero training.

What’s Missing? The Second Place.

But there is a factor that is a potential hiccup. Many folks that adopt a telework or freelance work model and opt to work from home quickly come to miss the social aspect of their old work place.

In the US and Western countries, there has been a growing adoption of coworking spaces, where freelancers, employees of small businesses, or teleworkers can get the best of both worlds: they can work from a work space close to their home — thereby avoiding a long distance commute — but at the same time they can have the support and stimulation that comes from social interaction with well-known people other than your family.

Ray Oldenburg, the urban sociologist, is best known for his notion of the Third Place, like the corner bar, the cafe, or the barber shop, where we can interact with people that we don’t know well, and perhaps with whom we have little in common. He argued that such places are critically import to the health of cities and out societies. He took almost as a given that people would continue their relationship with First and Second Places, the home and the workplace, respectively. But the trends of telework and freelancing means that an increasing means the more people are spending less time in official Second Places, and more at home and Starbucks. But as wonderful as working in a café is, there is definitely a great deal missing.

So it’s no real surprise that the coworking movement is growing at a pace that seems closely linked to the number of people jumping into telework or out of the traditional workplace. Deskmag states there are now more than 1,100 coworking spaces worldwide, more than double the number in 2006. Loosecubes, a service set up to help people find coworking spaces, is tracking over 1,400 locations in over 500 cities, globally.

According to Carsten Foetrsch of deskmag, 72 percent of all coworking spaces become profitable after 2 years of operation, and for privately-run spaces, the number is even higher: 87 percent . So the economics for those interested in setting up and running coworking spaces is compelling.

A Virtuous Cycle?

Looking from a economics viewpoint, all the players have economic motivations to support coworking:

The office worker saves significant expense and time by decreasing commute time, and those with the longest commutes should have the strongest motivation to shift to telework. Therefore, there is a steady migration to telework as businesses adopt policies to support it.

Businesses have a strong incentive to increase employee morale and productivity, and to decrease expenses related to the increasingly large percentage of their office space that is underutilized. Even if businesses have to subsidize coworking space use by teleworkers, the net savings are significant.

As the number of freelancers and teleworkers increase, the demand for coworking space grows, since people need the strong social connections historically offered in the workplace, not just the chance connections afforded by sharing a table in Starbucks.

Entrepreneurs have strong incentives to create coworking spaces: partly to serve as their own base of operations, but also as a business proposition of its own. Note that the desire of businesses to shed unneeded office space in our down economy also provides lower cost space in which to set up shop.

When you look at it as a system, coworking is a complex societal dance, where the various players are each seeking to maximize their personal economic situation, and it leads to a new social reintegration. And the result of this migration of workers from the office to the coworking space is a net benefit for the world, too: the decrease in energy use for the unused office space and the decrease in commuting translates into decreased carbon footprints for all involved.

Coworking may turn out to be the pivot in today’s post-industrial transformation of work: a shining example, perhaps, of how large-scale positive change at the societal level can emerge peacefully from the independent pursuit of personal ends.

Stowe Boyd writes and speaks about social tools and their impact on media, business and society. A GigaOM Pro analyst, Boyd also writes at stoweboyd.com and is working on a new book about the rise of a socially augmented world, called Liquid City: A Liquid, Not A Solid; A City, Not A Machine. Stowe will be speaking about co-working at Net:Work.